Interest rate rise
 

Is it only me or should these people on the news who are winging at a £15 per £100 K mortgage loan are that skint that they can't afford it! If they are are you telling me they don't have ANY 'luxury's' in life? after all, even on a £500K mortgage we are only talking £75 a month, thats less than a lot of people spend on beer a week never mind wine at £XX a bottle

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They are worried that they might not be able to keep up with the Jones's. Send them to Africa for a real dose of what happens if you cant afford anything.

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I fully agree with you Ian, it's a case of "if you can't stand the heat , dont go in the kitchen". These things should be thought through at length before being embarked upon, money is cheap to borrow at the moment, but just look back to the 'Thatcher' years', base rate 13 per cent plus 5 per cent bank charges for company overdrafts. No wonder half the country went bust!

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I found my old London flat on an Estate Agent's site last weekend.

Just an ordinary, first time buyers, one bedroom garden flat, near a tube line. Nothing special. I bought it in 1991 for £42,000, and sold it eight years later for well over three times that amount. It's now for sale at £225,000.

Unlike other people, I do have sympathy for people who are affected by the interest rise, especially for people who felt forced to take out motgages up to five times their salaries. £75 might be the difference from them worrying about the bills that fall on their mat or not.

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A lot of people do not have a choice but to take up these huge mortgages in comparison to their income. The price of living is increasing at an exortionate rate...I do not look forward to buying my first home at all :(

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Without my parents giving me a deposit, and it taking most of my wage, I'd have never got onto the housing chain. In London I'd rented for six years before managing to buy. Renting was expensive, more so than my mortgage.

I feel sorry for young people today, as unlike the rest of Europe there isn't a massive stock of affordable, private accomodation to rent, and it cuts down the choices for people, who for whatever reason, who prefer not to buy.

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The average starting salary for a newly qualified nurse is £13,251. Which if offered 95% mortgage would mean they would be looking at properties up to £45,000. A hard task in Hyndburn, and impossible in other parts of the country.

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but is this a case of people's lives changing. It always used to be you bought a house when you got married/decided to live together so there would be 2 wages coming in. As such they could afford a bit more. (IIRC it used to be 3x 1st + 2nd OR 2.5X combined. Given two 'new' nurses you could get over £50K mortgage so with a deposit your into £60K+)

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but willow taht example is also taking it as 2 people on what is just over minimum wage. Most couples I know have at least one person on more than that.

I know its maybe not as easy as it was when I bought our house but its still possible.

In the original post I was trying to show that even though rates rise people seem to value their luxuries over and above their homes. It does also come down to people ignoring advice from Banks/ etc that you should always ensure you are not stretched financially when you buy property. There needs to be a buffer zone between incomings and outgoings to handle things like rate rises, emergency repairs, maintenance etc.

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...not a great deal for sale in Hyndurn for sixty grand, and in other parts of the country it might buy you a garage.

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It is extremely difficult for first time buyers these days but I agree with what Entwisi is saying regarding luxuries, its not a great amount compared to what people spend on beer, fags etc, though I dont think our wages will increase by 5+% this year!

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firstly house prices down south are so high that we had no choice but to move up here to get on the property ladder
secondly when we bought this house 2 years ago (just under £53.000) there were two of us working however shortly afterwards my wife became ill and was unable to work making things very difficult-we had to borrow left right and centre just to stay afloat. Even though my wife has now gone back to work we are only just managing to stay afloat so the increase in interest rates will make things more difficult for us

so yes i do have sympathy for those who are going to struggle

i also believe that it is an overreaction from the bank of england due to christmas and increased house prices i can easily see a market crash on the way again!

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Someone working 40 hours per week on the minimum wage, which lots of people do, would give an annual salary of £10,504.

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Just done a quick seach on Duckworth's Estate Agents site. They only have one house on their books under £60,000, and that needs extensive renovation, which would make aquiring a mortgage on it, for the fifty grand it's up for, difficult.

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I also feel for them, I would have to put myself 5x salarie to afford a house, and a 35 Year Mortgage.

Things also change for people, and £75.00 a month is a big deal when you aint got it.

You got to believe it, £45.000/£50.000 houses will be snapped up by people who buy from down south and property developers, Landlords.

I feel a Crash coming on soon.

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This is all complicated. I don't want to get a mortgage, not yet anyway. It all sounds to scary!!! But with the interest rates rise, should now be the time to get a savings account?

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I bought my first property in 1964 at a fixed rate of interest, the loan £600 at 6per cent, under the small dwellings aquisition act, this was a scheme for people who could not get a mortgage off a building society, it was funded by the government and administered by the then Accrington Borough Council. This rate was 1 per cent above the then bank/building society rate, Mr. A K Boydel was the Borough Treasurer at the time, he said "try to borrow it elswhere your crazy for borrowing money this dear" The moral to this story is when interest rates are low try to get a fixed interest and buy property, you can not loose. Epilogue, I paid £850 for the house and I still live in it, the last place to put money is in banks and Insurance ,they take your pound when it's worth a pound and give it back to you when it's worth nothing.

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unless your in the position then you dont know what kind of struggle it is for people,and why are you complaining about other people who are struggling,yes some have luxurys but remember some are living to there means aswell with no luxurys

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exactly what I was saying. teh people they interviewed were living in 'seriously' expensive homes. the clothes they wore were designer and the trappings in teh backgrounds were not cheap. Yet they were complaining about having to find the extar few quid.


I've a lot of time for people who like us have had to start off with nothing and work their way up. You do have to be prepared to invest a bit of time and effort in things in life, mortgages are one of those things that the more you put in the more you will gain back

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As a matter of interest do most people take out fixed or variable mortgages?

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if you do it correctly, it varies on a number of variables.

Current interest rate

'Your' view of what CIR is going to do over the next 5/10 and 15 years

your attitude to risk

your current financial situation and your view to the importance of a 'stable' budget


Plus lots of others but these are probably the major ones.

Take your time and research it well, even better get an IFA to talk it through with you

forgot to add, make sure your aware of thngs like early payment charges and how that affects things

Then you get into repayment or investment based

or offsets or foreign or .....

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You can't judge the whole country on who was interviewed on television, and if you thought they could afford the interest rise or not.

For a lot of people the rise will be a worry, even if it is in your words 'only' £75 per month. For some people that will be more than a weeks disposable income.

Don't turn into Marie Antoinette.

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This is the only bit of sense iv'e read in this thread so far, it is the only place where money can be invested and incease with inflation, this is precisely what banks insurance companies and building societies do with 'your' money.

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Not necessarily. Lots of people were caught out when the housing market last crashed in the late eighties/early nineties. Unlikely it will happen again, but negative equity is always a possibility.

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i'm not so sure the way things are going all warning signs are pointing to the possibility of a crash

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The people that were caught in the equity trap borrowed dear money, interest rates are as low as they have been in my lifetime, in 1964 they were 5/6 per cent it will never get any lower. Thatcher fueled inflation by incerasing interest rates, the only danger facing us at present is the easy to obtain credit cards with ridiculous rates of interest ie apr 29 per cent, mortgage money at 7/8 per cent is cheap, but as willow said if you buy the correct type of property 'not this modern wood framed crap' it will retain it's value through thick and thin times. If you sit on your backside worrying about crashes and failures you should not join the ranks of house ownership or go into business, be a nearly man instead.

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That's fine, if yout property is worth the same, or more than you took out a mortgage on it for, or if you plan to stay in the property long term.

When I first bought after the last crash, lots of my friends were in negative equity, and couldn't afford to sell sell. They just had to sit and wait for the value of their property to rise again to what they paid for it.

Some wanted to move because they'd got other jobs. Some because they now had children and were in a one bedroom flat. One couple I knew got divorced, but still had to live together because they couldn't afford to sell and split the cash from their property, because there wasn't any.

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I take your very valid point garinda it does not work for everyone, but in the long run you can't lose on property, I have owned this property since 1964 but have not always lived here, I kept it as an 'insurance policy' which has now matured.

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I totally agree. If you are staying put, and don't have to move, negative equity isn't a worry.

I was very lucky. Twelve years after first taking out a mortgage, and three moves later, I was mortgage free. Still feel sorry for people who are struggling though. Salaries haven't risen anywhere near as much as the vastly inflated house prices. The market hasn't stagnated or crashed already because lenders now give mortgages for up to five times people's salaries, or for longer than the traditional twenty five years. Without first time buyers being able to get on the property ladder, the whole chain of house sales grinds to a halt.

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garinda as usual you have got the last word, as Rumpold said I rest my case:D

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That the main struggle. and if you cant afford the fees involved in starting your morgage, inc a 5% deposit then you are really snookerd, I would love to buy my own property, but it would leave me struggaling to have a life. and be over 35 years.:(

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I know what you mean mr D, me and my partner would love to buy our own house, something to leave the kids but as you say no cash for deposit so it looks like we have to rent until we have some spare cash!

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At the end of the day lenders are having to lend more for longer in order to substain growth and profit. They dont give a hoot about those who buy this way and then through issues not of their own making start to struggle.